May Newsletter

May Newsletter

Employees can continue to claim tax relief if working from home

Employees can be paid £6 a week tax free Home Working Allowance whilst working from home. The amounts are free from income tax and Class 1 national insurance contributions (‘EEs and ‘ERs).

The normal rule to take advantage of this exemption is that the employee is required by their employer to work from home from time to time and is normally not available where the employee works from home as a matter of choice.

£6 a week tax free for a higher rate taxpayer is equivalent to £538 gross pay (after 40% income tax and 2% employee NICs). The employer would also save 13.8% NICs. This rule was temporarily relaxed due to the COVID-19 pandemic for 2020/21. HMRC have advised that as long as an employee has been required to work from home at some point during 2020/21 as a result of the COVID19 pandemic they will accept a claim for home-working for the whole 2020/21 tax year. This has now been extended to 2021/22 up until the end of the pandemic.

Where the employer does not pay the allowance, the employee may make a claim for a deduction of £6 a week from their earnings and this has also been extended to 2021/22. That would result in a tax refund of £124.80 for a higher rate taxpayer.

The quickest way to make a claim is to use the HMRC online claims service which requires the employee to set up a Government Gateway account. Alternatively, employees should use HMRC form P87 to make their claim.

 

Making Tax Digital extended to more businesses

Currently only VAT registered businesses making taxable supplies in excess of the £85,000 VAT registration threshold are mandated to comply with Making Tax Digital (MTD) rules. Those rules require the business to keep digital business records and send VAT returns using MTD-compatible software.

MTD for VAT is now being rolled out to all VAT registered businesses from April 2022 which may cause some traders who are VAT registered but below the threshold to consider deregistering to avoid having to comply with MTD for VAT.

If you decide to do so you will need to complete Form VAT7 and account for output VAT on the market value of stock and assets still owned at the date of deregistration. This is where input VAT has been reclaimed on those assets. There is however, a £1,000 de-minimis which means that output VAT does not need to be accounted for where the combined market value of the assets is less than £6,000.

Unfortunately, deregistering for VAT will not necessarily sidestep MTD as the requirement to keep business records digitally will be introduced for income tax from April 2023.

From then MTD for income tax will apply to businesses with gross income in excess of £10,000 a year which will include property landlords as well as traders and professionals.

 

Leadership is the new normal

The success of a team relies on its leader being able to effectively delegate and give clear direction. The most successful business leaders are those who have mastered the art of direction. Their communication skills tend to be top notch and they are effective delegators.

In today’s world of remote working and with a strong reliance on technology, changes in employee expectations have meant that the core management skills of direction, delegation and communication have never been more important.

Looking to the (post-pandemic) future, many businesses will adopt a hybrid working model. For employees this will mean working in a world with more choices about where, how and when they work; meaning that managers will have to adapt to a new normal, where they have less visibility of their team member’s day to day activities.

This should mean that managers will focus on outputs more than processes. However, if this is the case, communication will be more important than ever in order to avoid overburdening employees with too much work. Business leaders will also need to give very clear direction in terms of which objectives should be prioritised, and so forth.

With an increase in remote working, the responsibility to maintain communication across the team will fall to the manager/leader. In order to succeed, managers will need to focus on fewer, higher-impact relationships with team members. They will need to delegate some additional responsibility to others within the team, in order to ensure that the whole team receives sufficient direction.

 

Newmarket Cricket Club Sponsor

We are delighted to be sponsoring Newmarket Cricket Club who, after a successful launch last year, opened their season last weekend with a thrilling home win!

We're really excited to follow the club’s journey and we wish them the best of luck for the rest of the season!

  

 

 

 

DIARY OF MAIN TAX EVENTS MAY/JUNE 2021

19/05 - PAYE & NIC deductions, and CIS return and tax, for month to 5/05/21 (due 22/05 if you pay electronically)

01/06 - Corporation tax payment for year to 31/08/20 (unless quarterly instalments apply)

19/06- PAYE & NIC deductions, and CIS return and tax, for month to 5/06/21 (due 22/06 if you pay electronically)